Scottish secure farming tenants will be able to “sell” their tenancy from the end of this month. They can sell to their landlord or another farmer at a price determined by a set formula.

The new Scottish legislation applies to farmers who have tenancies under the Agricultural Holdings (Scotland) Act 1991. It is thought about 4,000 want to relinquish it or assign it to a new entrant or progressing farmer.

Tenants who wish to retire or quit the holding will receive half of the difference between the vacant possession value of the holding and the value with a tenant in place, plus compensation for any improvements, minus any money due to the landlord for dilapidations.

Reference: How to transfer tenancies for succession in Scotland

The Scottish government promised this change as part of the Land Reform (Scotland) Act 2016 as introduced to the tenant farming commissioner and the Scottish Land Commission.

It is anticipated the new arrangement will encourage tenants who may be reluctant to give up a secure tenancy due to the financial consequences to do so, thus releasing more opportunities for new entrants.

Independent valuation process

Bob McIntosh, the tenant farming commissioner, said: “If the landlord chooses not to ‘buy’ the tenancy, the tenant can assign the tenancy for value to someone who qualifies as a new entrant to farming or as someone who is progressing within the sector.”

He added: “The ‘price’ of the tenancy will be a matter for negotiation, and the incoming tenant will take on the tenancy on the existing terms and at the same rent.” He said.

The commissioner will appoint an independent valuer to calculate the amount payable, drawn from a panel of experienced valuers, which has recently been set up.

Tenants and landlords will be able to nominate their preferred valuer, and the tenant must pay the cost of the valuation.

The Scottish Tenant Farmers’ Association (STFA) welcomed the move and said the new legislation will break the “tenancy logjam”.

For details on the panel, see the Scottish Land Commission website.

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